How do you build business credit as a small business owner?

Having strong business credit is critical for your business and its growth. Whether you’re looking to grow your team, expand your product offering, or get your cash flow back on track, it’s worth considering the power of financing to support the next stage of your business’s journey—and that’s where building business credit comes into play.

Lending options can help you invest in your business and improve your performance in the long run. However, gaining access to financing starts with proving your creditworthiness to lenders. One way to do that is with a strong business credit profile. In a nutshell, your business credit profile shows lenders how likely you are to meet repayment obligations in full and on time. If you haven’t yet established your business credit or if you want to make your existing score even stronger, follow these simple steps and you’ll be on your way in no time.

What is business credit?

Business credit is your company’s history of debt repayments, including business loans, credit cards, and lines of credit. The stronger your business credit, the more reliable of a borrower you are, which means your business will be more likely to get approved for additional credit in the future. Solid business credit also helps you qualify for lower interest rates on small business loans, as well as more favorable repayment terms.

How can I build business credit fast?

Building your business credit will take time. As your business grows, you’ll be able to develop and strengthen relationships with partners, vendors, and lenders—and it’s important to make sure anybody you’re taking credit from reports your payments to the business credit bureaus.

Here are six steps to help build your business credit.

1. Incorporate your business

First things first: you need to incorporate your business. By definition, this means establishing your business as a legal business entity and officially separating your business assets from yourself, the owner. Three common types of business corporations include C-corps, S-corps, and Limited Liability Corporations (LLC). 

When you establish your business as one of these, you’ll get articles of incorporation, a Federal EIN (or employer identification number), and a host of other benefits. For example, this will give your business added legitimacy, protect your personal assets in the event of a lawsuit against your company, and allow you to open a business bank account—which leads us to our next tip…

2. Open a business bank account

Keeping your business finances separate from your personal finances is important for a number of reasons. For one thing, you won’t have to spend hours combing through financial statements to separate business transactions from personal ones. Plus, it moves you one step closer to building business credit.

A business checking account alone isn’t going to build business credit. But opening the account (and having the right business incorporation to do so) signals to the credit bureaus that your business is ready for a credit profile. Plus, you can use this business checking account to make payments on actual credit accounts that directly impact your business credit.

If you don’t already have a business checking account, there are a number of factors to consider in a business checking provider—things like fee structure, balance requirements, interest, available financing options, digital experience, etc. Make sure to keep these things top of mind as you search for the right fit.

Did you know?

We surveyed over 800 small businesses to learn about what owners are looking for in banking services—then we developed a solution made just for you. Bluevine Business Checking is the only checking account built specifically for small businesses. There are no hidden/monthly fees or transaction limits, and you’ll get one of the most competitive APY rates around. Not to mention, you’ll be able to track and manage all your business transactions in one place.

To build credit, you need to get credit—and then make payments in full and on time to show the business credit bureaus that you are a responsible borrower. A great place to start is by opening a risk-free line of credit from a lender like Bluevine.

With the Bluevine Business Line of Credit, you’ll have access to a revolving line, which you can easily take draws from when you need, and then pay only for what you use. And because Bluevine actually reports payment activity back to credit bureaus, you can easily build credit over time as you meet your payment obligations and utilize your line of credit thoughtfully.

3. Establish a line of credit

So why a line of credit over, say, a credit card? While these two financing options are similar, lines of credit tend to offer more flexibility and opportunity for small business owners. For example, here are some of the benefits your business can enjoy with a line of credit:

• Fees: Bluevine’s Business Line of Credit comes with no maintenance fees, while many business credit cards charge annual fees. 
• Credit limit: The actual credit amount tends to be higher for a line of credit than a credit card. 
• Cash: Having a line of credit means having access to actual cash that you can deposit into your business checking account. This can be especially helpful if you haven’t gone cashless in your business and need to make a cash payment to a vendor, for example.

All in all, lines of credit offer businesses peace of mind. They’re a source of additional cash to growth opportunities or can act as a safety net when unexpected expenses hit—and they can help you build business credit in the process.

4. Pay bills on time

Payments on a line of credit, credit card, or other financing source aren’t the only metrics that credit bureaus track. They might also get payment history from your vendors or other accounts. A great way to streamline the bill-paying process with everyone from your supplier to your utility companies is to set up automated online payments. Not only does this help ensure that you never have any late payments causing delinquency on your credit report, but it also helps take a little bit of stress off your shoulders by giving you one less thing to have to stay on top of.

Did you know?

Bluevine Payments lets you pay all your vendors and other bills from one place using whichever payment method you choose. Pay by check, ACH, wire, or use an existing credit card (and continue earning points and rewards on purchases). These payments can be one-time, recurring, or scheduled payments, and will help ensure that you never miss a payment or fall behind.

5. Avoid negative marks on your business credit report

Unpaid business debt or taxes can result in a lien on your business property, or a court ruling against your business, which will show up on your credit report. It’s crucial to avoid these negative marks, in addition to bankruptcy filings, especially when your business is seeking credit. Collections, tax liens, and judgments can stay on your credit report for about seven years, while bankruptcies linger for up to 10.

6. Keep your info up to date with business credit bureaus

Make sure all your information is up to date with the three major business credit bureaus: Dun & Bradstreet, Equifax, and Experian. This will help you maintain and build your business credit score by having errors removed and keeping items on your report accurate and current.

Next steps for your business credit

At the end of the day, business credit can help further legitimize your business and give you more opportunities for growth. Established businesses have a variety of financing options, including small business loans, business credit cards, and business lines of credit. With consistent, on-time repayments, you can use credit to build your business—while using your growing business to help build your credit.

Business credit FAQs